Disruptive pricing to continue for a year in India’s telecom market: GSMA’s Mats Granryd

'In India, spectrum, taxation and regulation is a problem which is also evident in other markets. Taxation should be predictable and fair.'Muntazir Abbas | ET Telecom | Updated: July 04, 2017, 08:23 IST

NEW DELHI: Telecom group GSMA has said that the disruptive pricing due to heightened competition in the Indian telecom space would continue for at least another year and the situation is no different from other markets where carriers were cutting tariff to beat competition.

“What’s happening (declining revenue) in India seems to be a consolidation of market. You take the example of Europe, telcos operate in low revenue, and similarly in North America, where a couple of operators are trying to beat competition by lowering tariff,” GSMA director general Mats Granryd told ET.

Granryd believes that the disruption will continue for another one year in India.

Jio’s disruptive entry in September last year on the back of freebies have dragged the earnings of telcos for three consecutive quarters with India’s market leader Bharti Airtel’s net profit alone plunging 72% in the quarter ended March 31.

Incumbent players including Bharti Airtel, Vodafone India and Idea Cellular have had to cut their tariffs sharply to stay competitive following Jio’s entry. Intense competition has also forced rapid industry consolidation with Vodafone’s Indian arm and the country’s third-largest operator Idea Cellular announcing a $23 billion deal to merge their operations. Reliance Communications, Aircel and MTS are in the midst of a merger as well. Besides, Bharti Airtel is in the process of buying out Telenor India.

Consolidation, according to him, is good for India as mobile carriers need stronger balance sheets to fund capex needs for expanding their networks, which in turn help in stronger revenue generation. Telcos, according to the industry group, invest $200 billion annually in capital expenditure worldwide that included a significant portion from Indian players.

GSMA, though, feels that market consolidation appears to be a relatively newer phenomenon for Indian telecom firms and it would help in the longer span.

It echoed views of Indian telcos that the industry was heavily taxed and needed government support to alleviate the current financial stress underlined by a debt of nearly Rs 5 lakh crore, with some fears of default.

“In India, spectrum, taxation and regulation is a problem which is also evident in other markets. Taxation should be predictable and fair,” Granryd said, adding that the group was globally seeking harmonized airwaves as well as fair terms and conditions for affordable long-term spectrum.

Industrialist Kumar Mangalam Birla and telecom tycoon Sunil Bharti Mittal have sought help from the government, including rationalization taxes, to overcome financial stress.

With a fast growing fourth generation (4G) technology market, the telecom group feels that India’s telecom landscape is quickly changing to an all new data-led services including live video streaming.

“It is a benign environment but challenging because of a changing behavior,” Granryd said.

There is an increase in data demand and in order to meet that, telcos need to invest heavily in networks, the group’s executive said, adding that the India’s current situation is similar to that seen in China, Europe and North America.

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